Beforepay is a new-age lending app that gives you a short-term loan before you actually get paid.
Background: Beforepay is a new-age lending app that gives you a short-term loan before you actually get paid. It's kind of like a payday lender or pawn shop reincarnated in your phone.
What happened: Beforepay users have four weeks to repay the loan plus a 5% transaction fee. That ends up being a 60% annual interest rate (yikes!).
What else: After launching in 2019, Beforepay went public on Monday, listing at $3.41 per share. But by noon, shares had tanked over 40% to just $1.90.
💡Thanks to a loophole in Aussie credit legislation, apps like Afterpay and Beforepay aren't regulated by strict lending laws, like other financial institutions and banks.
💡This has allowed companies like Beforepay to lend to almost anyone. In fact, nearly 25% of Gen Z Aussies have used a pay on-demand service.
💡But lending money willy nilly can be extremely risky - because it may be tricky recover these funds when you haven't done your due diligence. And it's this fact that may have spooked Beforepay investors.
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